Rents rising faster than property values - CoreLogic

CoreLogic expects the property slowdown to last until the end of this year. Picture / Peter Meecham

Rents are rising faster than property values, according to property data firm CoreLogic.

The median amount charged by landlords rose by an average of 6.5 per cent across the country over the 12 months ended July, CoreLogic said.

This was slightly faster than the average rise in property values, which CoreLogic said were up by 6.4 per cent from this time last year.

Growth in median weekly rents by region was lumpy, rising by 14.2 per cent to $297 in Dunedin, but falling 4.3 per cent in Christchurch to $330.

In Auckland median weekly rent was $505, up by 3.5 per cent in the last 12 months.
Rents are up, however, housing activity has slumped - particularly in Auckland and Hamilton.

Market activity, measured by the number of valuations run by banks through CoreLogic's system, was down 32 per cent on August last year in Auckland and 33 per cent in Tauranga.

"The already strong drop in sales volumes combined with market activity now ambling along at seasonally low levels up to 30 per cent below last winter tells us the market slowdown remains," said CoreLogic NZ head of research Nick Goodall.

"Property value change is variable too, with some areas of NZ now showing value decreases".

Goodall expected a prolonged housing slowdown lasting towards the end of the year.

"Leadership changes and variable poll results have created a volatile political environment, the uncertainty of which will be affecting some potential buyers.

"We also expect the reduced availability of credit to continue to affect demand. For these reasons, a prolonged slowdown, lasting towards the end of 2017 is anticipated," he said.

"Ultimately however, even after taking affordability concerns in Auckland and elsewhere into account, strong fundamentals, including a positive economic outlook, remain.

"Property values could therefore rise again in the New Year: albeit at a more modest pace than the previous two".